Financial Models And Tools for Managing Lean Manufacturing

by Meade; David

• ISBN13: 9780849391859
• ISBN10: 0849391857
• Edition: 1st
• Format: Hardcover
• Copyright: 2006-08-15
• Publisher: Auerbach Public

Summary

Financial Models and Tools for Managing Lean Manufacturing provides an understanding of the impact that traditional accounting practices have on operational improvement programs. This book shows managers of supply chains how to prepare for and present the impact of Lean Manufacturing to top management and stakeholders of a company. To illustrate the impact of lean manufacturing on the income statement, it presents a multi-month, Excel and Pro-Model based manufacturing operation environment that incorporates actual sales, sales forecasts, and production results. This text offers the financial skills that supply chain managers need to successfully manage Lean Manufacturing and its impacts.

Table of Contents

Key Features of This Book	xi
Preface	xv
Acknowledgments	xvii
About the Authors	xix
Contribution of This Book	xxi
1 Introduction	1	(10)
Historical Background of the Problem	2	(3)
Objectives of the Study	5	(1)
Important Questions for the Study	6	(1)
Importance of This Study	7	(1)
References	8	(3)
2 Impact of Management Accounting Methods on Lean Implementation	11	(16)
Management Accounting	11	(3)
Transition in Focus from Internal to External	14	(2)
Difficulties Presented by the Current Forms of Financial Reporting	16	(2)
JIT and Lean Manufacturing Practices	18	(2)
Related Studies and Missing Elements	20	(3)
Problems with Previous Studies	23	(1)
Contributions of This Study	23	(1)
References	24	(3)
3 Multi-Period Simulation Model of a Factory with Lean Manufacturing	27	(36)
Experimental Design, Statistical Hypotheses, and Data Analysis	28	(1)
Experimental Design	28	(1)
Proposed Hypotheses	29	(1)
Data Analysis	30	(1)
Methods Diagrams	30	(2)
Experimental Factors	32	(1)
Generation of a Random Sales Demand	32	(1)
Inventory Policy	33	(1)
Management Accounting Method	34	(3)
Full Absorption	34	(1)
Direct (Variable)	35	(1)
ABC	35	(1)
TPC	36	(1)
Order Activity	36	(1)
Detailed Description of Data Generation Process	37	(11)
Simulation Model Design	48	(1)
Simulated Factory Parameters	49	(1)
Model Manufacturing Operation	49	(7)
Production Planning Tool	56	(1)
Calculation of the Coming Month Production Schedule	57	(1)
Tracking of On-Hand Inventories	57	(1)
Calculation of Income Statements by Accounting Method	58	(1)
Model Execution — Data Generation	59	(1)
Technical Issues with the Simulation Model	60	(1)
References	61	(2)
4 Analytical Findings from Lean Manufacturing Factory Operation	63	(30)
Raw Data and Descriptive Statistics	63	(1)
Tests of Hypotheses	64	(2)
Hypothesis 1	66	(1)
Hypothesis 2	66	(2)
Hypothesis 3	68	(1)
Hypothesis 4	68	(1)
Hypothesis 5	69	(1)
Hypothesis 6	69	(1)
Hypothesis 7	70	(1)
Hypothesis 8	70	(1)
Hypothesis 9	70	(1)
Results by Performance Measure and Period	71	(1)
Gross Profit	71	(7)
ANOVA Results	71	(1)
Evaluation of Gross Profit Mean Values	72	(6)
Net Profit	78	(7)
ANOVA Results	78	(1)
Evaluation of Net Profit Mean Values	79	(6)
Sensitivity to Sales Variability	85	(1)
Service Level	85	(2)
Sensitivity Analysis	87	(3)
References	90	(3)
5 Conclusions and Implications of Lean Manufacturing Factory Operation	93	(14)
Summary of Research Findings	93	(4)
Comparison to Previous Studies	97	(1)
Implications for Practice	98	(3)
Limitations	101	(1)
Suggestions for Future Research	102	(1)
Expansion of Time Horizon	103	(1)
Expansion of the Number of Inventory Reduction Policies Modeled per Dataset	103	(1)
Customer Service Level Measures	103	(1)
Reduction in Reporting Cycle	103	(1)
Expansion of Income Statements	104	(1)
Use of Distributions Other Than Normal	104	(1)
Further Development of the Order-Activity Product Costing Method	105	(1)
References	105	(2)
6 Impact of the Pareto Distribution on Product Cost Calculations	107	(16)
Definition of Problem	109	(2)
Research Questions	111	(1)
Methods	112	(2)
Results	114	(2)
Discussion	116	(3)
Conclusions and Implications of This Research	119	(2)
References	121	(2)
Appendices
1 Simulation Data: Inventory Reduction Policy 1 —No-Reduction; Maintain Finished Goods Inventory Levels throughout the 12-Month Evaluation Period	123	(22)
2 Simulation Data: Inventory Reduction Policy 2 — Moderate-Reduction; 50 Percent Reduction in On-Hand Finished Goods Inventory Levels over a 12-Month Period	145	(22)
3 Simulation Data: Dataset 3 — Inventory Reduction Policy 3 — Aggressive-Reduction; 50 Percent Reduction in On-Hand Finished Goods Inventory Levels over a 6-Month Period and No Further Reduction through the Remainder of the Evaluation Period	167	(22)
4 Simulation Data: Dataset 4 — Sample Income Statements Utilizing the Mean Values of the 35-Replication Datasets under Each Accounting System and 25 Percent Sales Stochasticity	189	(6)
Index	195